Expenses and benefits: tool allowances
What to report and pay
Some tool allowances are covered by exemptions (which have replaced dispensations). This means you won’t have to include them in your end-of-year reports.
If you don’t have an exemption, you must report the allowance on form P11D.
If work tools are available for employees to use privately
The allowance you provide counts as earnings. You must:
- add the amount to the employee’s other earnings
- deduct and pay PAYE tax and Class 1 National Insurance through payroll